Future Friday: Can we offset job losses with wage insurance?

by Michael Haberman on April 28, 2017 · 2 comments

Where will your income come from when this is your replacement?

With the discussion of job losses due to technology becoming a stronger topic of discussion usually comes with the suggestion of some form of income replacement. A guaranteed income, taken care of by a tax on employers, is touted as a way of protecting workers who lose their jobs due to technology advancement. Some say that is just technological welfare. There is another approach.


One think tank is investigating the concept of a “wage insurance charge” that every employer pays. This “could be used for workers displaced by new technology.” In reality we already have a similar tax, the unemployment tax. It is paid on both a federal and state level. It is currently used for providing an income for workers who lose their jobs due to no fault of their own. Thus we are already half way there on a technology unemployment tax. We would have to change the terms, perhaps increase the amounts, and change the definitions of eligibility, but this is a mechanism that most employers are already used to paying.

Another option

What if there was another or optional method of providing an income for workers displaced by technology. The private sector already has private insurance policies that provide income replacement for disabilities. We have short-term and long-term disability policies that provide some form of income replacement. We could have similar policies that provide income replacement for job loss due to technology replacement. The supplemental income would help people while they look for work, and if the new employment was not at their previous income level partial income would still be paid out. These policies could be offered to employers to cover employees or be offered on the individual level. Would you be willing to take such a policy?

The inevitable

The inevitable wholesale replacement of workers by advancing technology is on the horizon. We need to be prepared for it, thus we need to explore options to provide people with continued income.  Few of us want to see this solely on the back of the government, or solely the responsibility of the company. None of us want to see this solely on the back of the employee either, since we may someday be in that position. We need to find a solution that spreads the risk and the opportunity.

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{ 2 comments… read them below or add one }

Sayward Masselter April 28, 2017 at 9:35 am

I think this is a great idea! Maybe the company would pay for a minimum level and employees could do a buy up.


Michael Haberman April 28, 2017 at 2:38 pm

Thanks for the comment Sayward. We just have to get an insurance company interested in investing the future.


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